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But Iain Duncan Smith's department says cost of more software over next five years will be revised downward
Patrick Wintour, political editor
The Guardian, Monday 9 December 2013 20.26 GMT
Iain Duncan Smith dismissed as 'bogus nonsense' claims of big additional write-offs. Photograph: Dave Thompson/PA
The government has increased its initial write-off of a failed IT system for universal credit by £6m to £40.1m, but acknowledged that a further £90m of software is likely to be written down in its value over the next five years.
The precise loss to the taxpayer will depend on how much of the existing IT software is retained after it has been merged with a new IT system being developed by the Cabinet Office's Government Digital Service.
Universal credit, which brings together six existing benefits, is seen as potentially the biggest change to welfare since the second world war. Ministers had to concede last week that it had fallen behind schedule and would not be completed by 2017 as originally planned.
Seeking to explain the £40m write-off, Mike Driver, finance director general at the Department for Work and Pensions, said: "There is no use for the IT code built to run the computer systems. It has no future value. It is not going to generate any future return for the department."
He insisted this level of write-off in the software industry was not unusual for a project of this kind. He said it would not be possible to seek any clawback in the contract since the specifications made by the department had changed, especially over security. The code was well written and engineered, the department added.
The latest statistics were given by the work and pensions secretary, Iain Duncan Smith, as he denied that the universal credit timetable was slipping or that it was losing control of its budget. Asked if further write-offs could be expected, he said: "If anything goes wrong going further forward, that might be different."
But he added: "We have had to sit for some time while a lot of bogus nonsense has been talked about huge levels of additional write-offs. This note in front of you absolutely finishes that and ends it.
"The reality is that what our estimate was earlier on, when we first put it to the National Audit Office [NAO], and this total figure are very close together.
"This has been one of the most complex and detailed assessments that has taken place either in the public or private sector. It is now signed off and tomorrow will be published."
Duncan Smith said the original IT system had got bogged down because of the need to provide security and the complexity of different elements interacting in one software programme.
The DWP said it was justifiable to declare the remaining £90m as not being written off because it would be written down over a five-year period, by which time universal credit would have been introduced.
The department added that it was legitimate for the £90m not to be written off since the NAO had accepted its definition.
The DWP said was unable to state at this stage the level of other non-software costs.
A spokesperson said: "It is not unexpected that IT requirements evolve on a long-term programme of reform and that some rework was required. But we are not complacent about this loss and are working to ensure that this project continues to roll out within the budget we have been set.
"This should be seen in the context of the £38bn economic benefit that universal credit will ultimately bring."
At a two-hour evidence session, Howard Shiplee, the universal credit director general, said a new business case would be put to the Treasury early next year.
He accepted that the software was incomplete for some claimants, including couples and those with children. He was also reluctant to commit himself to deadlines.
"This is not an IT disaster. This will be delivered in time and on budget," Iain Duncan Smith said in September 2013.
But last week he used the cover of the autumn statement to announce that he is to miss his deadline of getting all existing and new benefit claimants on to universal credit by 2017.
He also confirmed he is having to entirely rework the IT system at substantial cost because the original IT failed to meet the needs of claimants.
"What we are talking about will have no practical effect on the implementation of universal credit, which, by the way, is proceeding exactly in accordance with plans," Duncan Smith told MPs in March.
But in September a scathing report by the National Audit Office (NAO) said the welfare changes had been poorly managed and were riddled with major IT problems, threatening to increase costs by hundreds of millions of pounds.
The NAO report also outlined how the project was "reset" a month before Duncan Smith's comments to parliament, following the involvement of the Major Projects Authority, which has the power to intervene on behalf of taxpayers.
What he said
Officals at Duncan Smith's department said in October 2011 that 2 million households will get a lower entitlement to benefits as a result of the universal credit scheme.
But in a revised impact assessment, the Department of Work and Pensions said in December 2012 that 2.8 million households will get a lower entitlement to benefits.The much greater impact was regarded as being due to factors such as the deteriorating economic environment but officials also conceded that universal credit is less generous than first envisaged.
But Iain Duncan Smith's department says cost of more software over next five years will be revised downward
Patrick Wintour, political editor
The Guardian, Monday 9 December 2013 20.26 GMT
Iain Duncan Smith dismissed as 'bogus nonsense' claims of big additional write-offs. Photograph: Dave Thompson/PAThe government has increased its initial write-off of a failed IT system for universal credit by £6m to £40.1m, but acknowledged that a further £90m of software is likely to be written down in its value over the next five years.
The precise loss to the taxpayer will depend on how much of the existing IT software is retained after it has been merged with a new IT system being developed by the Cabinet Office's Government Digital Service.
Universal credit, which brings together six existing benefits, is seen as potentially the biggest change to welfare since the second world war. Ministers had to concede last week that it had fallen behind schedule and would not be completed by 2017 as originally planned.
Seeking to explain the £40m write-off, Mike Driver, finance director general at the Department for Work and Pensions, said: "There is no use for the IT code built to run the computer systems. It has no future value. It is not going to generate any future return for the department."
He insisted this level of write-off in the software industry was not unusual for a project of this kind. He said it would not be possible to seek any clawback in the contract since the specifications made by the department had changed, especially over security. The code was well written and engineered, the department added.
The latest statistics were given by the work and pensions secretary, Iain Duncan Smith, as he denied that the universal credit timetable was slipping or that it was losing control of its budget. Asked if further write-offs could be expected, he said: "If anything goes wrong going further forward, that might be different."
But he added: "We have had to sit for some time while a lot of bogus nonsense has been talked about huge levels of additional write-offs. This note in front of you absolutely finishes that and ends it.
"The reality is that what our estimate was earlier on, when we first put it to the National Audit Office [NAO], and this total figure are very close together.
"This has been one of the most complex and detailed assessments that has taken place either in the public or private sector. It is now signed off and tomorrow will be published."
Duncan Smith said the original IT system had got bogged down because of the need to provide security and the complexity of different elements interacting in one software programme.
The DWP said it was justifiable to declare the remaining £90m as not being written off because it would be written down over a five-year period, by which time universal credit would have been introduced.
The department added that it was legitimate for the £90m not to be written off since the NAO had accepted its definition.
The DWP said was unable to state at this stage the level of other non-software costs.
A spokesperson said: "It is not unexpected that IT requirements evolve on a long-term programme of reform and that some rework was required. But we are not complacent about this loss and are working to ensure that this project continues to roll out within the budget we have been set.
"This should be seen in the context of the £38bn economic benefit that universal credit will ultimately bring."
At a two-hour evidence session, Howard Shiplee, the universal credit director general, said a new business case would be put to the Treasury early next year.
He accepted that the software was incomplete for some claimants, including couples and those with children. He was also reluctant to commit himself to deadlines.
"This is not an IT disaster. This will be delivered in time and on budget," Iain Duncan Smith said in September 2013.
But last week he used the cover of the autumn statement to announce that he is to miss his deadline of getting all existing and new benefit claimants on to universal credit by 2017.
He also confirmed he is having to entirely rework the IT system at substantial cost because the original IT failed to meet the needs of claimants.
"What we are talking about will have no practical effect on the implementation of universal credit, which, by the way, is proceeding exactly in accordance with plans," Duncan Smith told MPs in March.
But in September a scathing report by the National Audit Office (NAO) said the welfare changes had been poorly managed and were riddled with major IT problems, threatening to increase costs by hundreds of millions of pounds.
The NAO report also outlined how the project was "reset" a month before Duncan Smith's comments to parliament, following the involvement of the Major Projects Authority, which has the power to intervene on behalf of taxpayers.
What he said
Officals at Duncan Smith's department said in October 2011 that 2 million households will get a lower entitlement to benefits as a result of the universal credit scheme.
But in a revised impact assessment, the Department of Work and Pensions said in December 2012 that 2.8 million households will get a lower entitlement to benefits.The much greater impact was regarded as being due to factors such as the deteriorating economic environment but officials also conceded that universal credit is less generous than first envisaged.
